by: Thomas Fafinski
The best time to speak with the county property tax assessor is after you receive your notice of estimated market value but prior to the deadline for filing an appeal with the local or county board of appeal and equalization. The notice itself will provide you with the deadlines for filing your appeal.
Property tax assessors are generally required to value the property at 100% of the fair market value. Fair market value means the most probable price which a specified interest in real property is likely to bring in a sale which is reasonable in scope and duration.
Often times, it is our client’s purchase that triggers the increase in valuation. You can, however, sometimes explain that physical conditions/deferred maintenance existed, and that your assessment of those conditions did not occur until after the closings of the property. You could also discuss that you are simply new at purchasing investment real estate, and overpaid for the property using comparables. You can also contact the property tax assessor to find out what records that the county is showing in terms of square footage, and amount of land being owned. Make sure they are consistent with your numbers.
Consider challenging the tax assessed value of a property whenever the difference between the tax assessed value and the fair market value in terms of the amount of taxes to be paid by the property owner is greater than the cost of the appraisal. You are not only trying to control the current year’s tax burden, you will have a positive effect on the property’s tax burden going forward. In other words, if you successfully reduce the property taxes this year, it will likely result in a reduction of the overall tax burden on the property for years to come.
Depending upon your claim, you may be able to present it in the small claims forum. The small claims decisions are final and cannot be appealed. If you file in the small claims division, you must satisfy one of the three following conditions: the issue revolves your application for homestead classification; only one parcel is included in the petition and the parcel contains no more than one dwelling; the entire partial is agricultural homestead; or the assessors estimated value of the property in the petition is less than $300,000. This is a very viable option for real estate investors in the single family residential market.
In the event that handling it with your property tax assessor does not yield a favorable result, consider hiring an attorney to try speaking with the assessor. If that fails, the remaining alternatives are always available and can be pursued. To do so, however can be costly as an appraisal is generally required to support your positions plus most claims are pursued by attorneys with the corresponding attorney’s fees associated with the representation.